Corporate-Level StrategiesSlide 2Slide 3Slide 4Slide 5Slide 6Slide 7Slide 8Slide 9Slide 10Slide 11Where did they go?Corporate-level strategyGoals of Corporate Strategy4 Conditions of Successful DiversificationProduct DiversificationLevels and Types of DiversificationSlide 18Procter & Gamble’s Diversification StrategyRelated Diversification at DisneyLevels of Diversification (N=3) (Cont’d)Slide 22GELevels of Diversification (N=3 ) (Cont’d)Unrelated DiversificationDrawbacks for UnrelatedCreating Value with Diversification StrategiesValue-Creating Strategies of DiversificationDiversification and the Multidivisional StructureOriginal Benefits of the M-formDiversification and the Multidivisional StructureOperational Relatedness – Sharing ActivitiesVariations of the M-formCooperative Form of the Multidivisional StructureCooperative Form of the Multidivisional StructureCooperative Form of the Multidivisional StructureSlide 37SBU Form of the Multidivisional StructureSBU Form of the Multidivisional StructureThe Competitive Form of the Multidivisional StructureCompetitive Form of the Multidivisional StructureCompetitive Form of the Multidivisional StructureCompetitive Form of the Multidivisional StructureBenefits of Internal CompetitionSlide 45Mergers, Acquisitions, and Takeovers: What Are the Differences?Slide 47Slide 48Slide 49Slide 50Failures of AcquisitionsWhy, then, do executives acquire?Effective AcquisitionsWhen/Why to Diversify?Types of Acquisitions to Increase Market PowerEntry Barriers that Acquisitions OvercomeCorporate-Level StrategiesKey TermsCorporate-Level Strategy – specifies actions a firm takes to gain a competitive advantage by selecting and managing a portfolio of businesses that compete in different product markets or industries. WHERE ARE WE GOING TO COMPETE?Snack FoodsBeverages FoodsFrito-Lay North AmericaFrito-Lay InternationalPepsi-Cola North AmericaGatorade/Tropicana North AmericaPepsiCo Beverages InternationalQuaker North AmericaSnack FoodsFrito-Lay North AmericaLay’sRuffles DoritosSantitasFritos CheetosRold Gold Funyuns Sunchips Cracker Jack Chester’s popcornGrandma’s cookiesMunchos Smartfood Baken-ets fried pork skinsOberto meat snacksSnack FoodsFrito-Lay InternationalBocabits wheat snacksCrujitos corn snacksFandangos corn snacksHamkas snacksNiknaks cheese sticksQuavers potato snacksSabritas potato chips Twisties cheese snacksWalkers potato crispsWalkers Square potato snacksWalkers Monster Munch Corn snacks Miss Vickie’s potato chipsGamesa cookiesDippasSonric’s sweet snacksSnack FoodsFrito-Lay InternationalBocabits wheat snacksCrujitos corn snacksFandangos corn snacksHamkas snacksNiknaks cheese sticksQuavers potato snacksSabritas potato chips Twisties cheese snacksWalkers potato crispsWalkers Square potato snacksWalkers Monster Munch Corn snacks Miss Vickie’s potato chipsGamesa cookiesDippasSonric’s sweet snacksBeveragesPepsi-Cola North AmericaPepsi-ColaMountain DewSliceMugSierra MistFruitWorksLipton Dole Aquafina Frappuccino SoBe AMPBeveragesGatorade/Tropicana North AmericaGatoradePropelTropicanaDole juicesBeveragesPepsiCo Beverages InternationalLoóza juices and nectarsCopella juicesFrui’Vita juicesTropicana 100 juicesFoodsQuaker North AmericaQuaker OatsCap’n Crunch cerealLife cerealQuisp cerealKing Vitaman cerealMother’s cerealQuaker rice cakes and granola barsRice-A-Roni side dishesNear East couscous/pilafsAunt Jemima mixes & syrupsQuaker gritsFoodsQuaker North AmericaQuaker OatsCap’n Crunch cerealLife cerealQuisp cerealKing Vitaman cerealMother’s cerealQuaker rice cakes and granola barsRice-A-Roni side dishesNear East couscous/pilafsAunt Jemima mixes & syrupsQuaker gritsBusiness Level StrategiesHow are we going to compete and gain a competitive advantage in each of our businesses?Snack Foods Beverages Foods Corporate Level Strategy1) What businesses do we want to compete in?2) How do manage effectively across businessesWhere did they go?13Corporate-level strategySpecifies actions a firm takes to gain a competitive advantage by selecting and managing a group of different businesses competing in different product marketsExpected to help firm earn above-average returnsValue ultimately determined by degree to which “the businesses in the portfolio are worth more under the management of the company then they would be under any other ownership - SynergyProduct diversification (PD): primary form of corporate-level strategyGoals of Corporate StrategyMoves to enter new businessesBoosting combined performance of the businessesCapturing synergies and turning them into competitive advantagesEstablishing investment priorities and steering resources into business units4 Conditions of Successful Diversification1) Growing industries with complementary products and technologiesApple IPhone2) Leverage existing capabilities which match the KSFs in other arenasDisney Cruise Lines3) Closely related moves which reduce costsKroger & Fred Meyer4) Powerful brand and reputationMarguerittaville, NASCAR Café, or Emril’sProduct DiversificationPrimary form of corporate-level strategyEntails the scope of the industries and markets in which the firm competesDefines how managers buy, create, and sell different businesses to match skills and strengths with opportunitiesIs expected to reduce variability in the firm's profitability, generating earnings from several different business unitsIts development and monitoring carry a cost which must be balanced with benefits to establish an ideal portfolio of businessesLevels and Types of DiversificationCurvilinear Relationship between Diversification and Performance19Procter & Gamble’s Diversification Strategy Purpose of diversification: Use expertise and knowledge gained in one business by diversifying into a business where it can be used in a related wayBuilds synergy: value added by corporate office adds up to more than the value if different businesses in the portfolio were separate and independentProcter & Gamble (P&G) Product mix: beauty products targeting women and baby care products2005: Acquired Gillette (consumer health care products) focused on masculine marketRelated Diversification at DisneyEntertainment/ProductionTheme ParksResortsEntertainment/BroadcastingCruise LinesRetailing21Levels of Diversification (N=3) (Cont’d)2. Moderate to High Levels Related Constrained Diversification StrategyLess than 70%